Month: October 2021

The following information relates to a possible capital investment, costing £900,000.

The company has a cost of capital of 8%. 

Which statement about the project is correct? 

Select ONE answer:

1. It has an internal rate of return greater than the cost of capital.
2. It has an internal rate of return less than the cost of capital.
3. It will be viable if discounted at 9%.
4. It will be viable if the capital cost is increased to £1m.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

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Which cost is described by the following?

‘Costs which should be achieved under efficient conditions, but allowing for normal wastage’.

Select ONE answer:

1. basic standard
2. currently attainable standard
3. flexible standard
4. ideal standard

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

What is a flexible budget? 

Select ONE answer:

1. a budget based on expected level of production
2. a budget based on past performance but updated to take account of present conditions
3. a budget that reflects changes in activity levels
4. a budget that links fixed overheads to production

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Which is normally the most appropriate sequence of events in the preparation of budgets?

Select ONE answer:

1. cash budget, budgeted Balance Sheet, production budget
2. cash budget, production budget, budgeted Balance Sheet
3. production budget, cash budget, budgeted Balance Sheet
4. production budget, budgeted Balance Sheet, cash budget

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

A company is about to quote a price for making a special order which requires 1,000 kg of material X and 1,500 kg of material Y.

The stock of material X can not be used by the company for any other product. Material Y is used frequently for other products.

Which cost of materials should be included in the quotation for the manufacture of this special order?

Select ONE answer:

1. £10,500
2. £11,000
3. £12,500
4. £14,500

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – (X – 1,000 * £2) + (Y – 1,500 * £7)
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.